The objectives of this proposal are to determine the mechanisms by which an osteoinductive material, demineralized bone powder (DBP), initiates chondrogenesis in human dermal fibroblasts in vitro, and to determine the fate of induced cartilage when implanted in vivo. The proposed studies will critically test the hypothesis that a change in expression of specific "master" gene(s) initiates induction of the chondrocyte phenotype in fibroblasts by DBP. Specific Aim I is to optimize the 3D culture system for maintenance of expression of chondrocyte phenotype. Goldring's immortalized adult human chondrocytes (T/C-28a4) will be used as a positive control for optimizing culture conditions, in order to permit quantitative analysis of chondrocyte markers, including immunohistochemical, biochemical (collagen type II, proteoglycans and GAGs) and molecular ones (COL2A1, aggrecan, link protein). Variables will include extracellular matrix components (chondroitin-sulfate, heparan-sulfate, hyaluronan) and continuous, or intermittent hydrostatic pressure. Specific Aim II is to characterize, by biochemical and molecular means, chondroinduction in human dermal fibroblasts cultured with DBP. The applicants will examine the sequence in which human dermal fibroblasts, cultured in collagen sponges with DBP, express features of the chondrocyte phenotype that result in cartilage matrix accumulation. Permanence will be determined by assessment of phenotype after cells are separated from DBP. Outcome measures include immunohistochemical characterization of matrix components and quantitative biochemical assessment of production of cartilage-specific collagen and proteoglycans. Expression of cartilage-specific genes will be demonstrated by RT-PCR, Northern hybridization and in situ hybridization. Specific Aim III is to identify regulatory genes controlling chondroinduction. Using the earliest markers of in vitro chondroinduction, efforts will be made to identify regulatory factor(s) that initiate chondroinduction by DBP. Candidate transcription factors that will be examined include scleraxis, SOX9, HOXC8 and twist. In addition, the applicants propose to use a highly sensitive technique of representational display analysis (RDA), previously used to identify rare transcripts that are up-regulated or repressed. Putative "master" gene(s) will be expressed for proof of function. Finally, Specific Aim IV is to test the fate of induced chondrocytes in vivo.